TAXATION BILL

Wanganui Chronicle, Volume 80, Issue 244, 14 October 1937, Page 8

TAXATION BILL

AIM OF GOVERNMENT Expenditure Out Of Revenue OPPOSITION CRITICISM BURDEN RETARDS INDUSTRY [ l‘cr Press Association. J WELLINGTON, Oct. 13. The adjourned debate on the second reading of tiie Land and income (.-uuiual) lint was resumed in the nouse of Representatives at 7.30 ;».m. lion. G. W. r cubes, who was the first opposition speaker 10-nigiit, criticised inc graduated land tax and said that apparently the Government had no intention ot mvising this form of taxation and ucafing with the unfairness ot its incidence. Dealing with other forms of taxation, he said that as long as there was heavy taxation there would be unemployment and struggling- industries, it had been proved over and over again that where taxation was lightened there was an immediate response in increased employment ana expansion of industry, and he considered that industries should be encouraged in the direction of lightening their burden of taxes. He contended that the hardship clause in the land lax had been ineifective in the past. The question of taxation was closely linked with unemployment and the Government should enquire into the question of how heavily income taxation was bearing down on industry and was hampering its development. Hon. J. A. Lee said that the manifesto of the Reform, United and Nationalist parlies promised to alter the incidence of taxation, but nothing was done. The Minister of Finance of the present Government had already promised to introduce a Bill to alter the incidence of taxation. It was true the last Governments had reduced taxation in the days of bounty but they went on the London market to make good the deficit because they had refused to pay their way. They had built up a staggering debt and now the country had to pay £10,000,000 to £12,000,000 in interest. Incidence of Taxation. “Nobody doubts that there should be an alteration in the incidence of taxation,” said Mr. Lee, “but it is not easy to make sweeping changes. During the depression incomes were not taxed as they should have been and people with surpluses, instead of putting their money into channels to create an increase in production and create employment, invested their money on fixed deposit. Labour aimed at paying their way always. It aimed to met expenditure out of revenue ana reduce the debt instead of piling it up for posterity.

Sir Alfred Ransom (Opp., Pahiatua) said that the prosperity of the country was not uue to me .administration. In the fast two years taxation had increased by £I4,UUU,UOU taken directly from the pockets or tae people. There was a grave danger of the ship of State sinking and the Opposition wanted to help stop the leans and avert that danger, it had been rumoured that the Government intended to increase the land and income tax to make good any loss through the removal of the sales lax.

Referring to the graduated land tax, he said he regarded it as one of the most unfair taxes collected from the people because it did not carry a provision for ability to pay. The Labour Government believed mat the primary producers should be the tenants of the State rather than the owners of the land.

Mr. \V. J. Lyon (Govt., Waitemata) said he was not prepared to admit that the improvement in conditions in New Zealand was due only to the improvement of prices overseas. Unless there was an equitable distribution of the national income then prosperity could not exist, and the Government had set itself out to secure that distribution. They were not much concerned with prosperity in the aggregate, but with tne prosperity of the individual. Labour was being told it was giving no protection to industry, but he would ask at what point the taxation on industry must stop. Would the Opposition tell them that? The Opposition had taken a great deal of credit for the fact that it had not reduced social services during the period of prosperity prior to the last slump. That was the time, he said, when it should have increased those services. They had been told that Labour was going to bring all the people down to a common level. This was not the objective. Labour intended to bring the people up to a common level. There was quite a differnce. He would like the Opposition to justify their contention of why the owners of land should not pay taxes upon it, and contended that the Opposition was putting up arguments I which were more specious than pracI ticablc. Minister’s Reply. Hon. W. Nash said that if he were to read the old Hansards all night he could not cover all the things the members of the Opposition had said in favour of the land tax in the past. If the.V were one person his Government was anxious to legislate for, it was the man with an average income of £4 per week. This man did not pay income tax and his taxation would probably amount to only £lO 10s per year, not £B9 10s, as had been alleged by the Opposition. The present Government nad been charged with having taken the income tax limit down to £2lO, but that was not correct. It was done by the previous Government in 1933. He continued that the Government had always been careful to preserve the exemption of £5O from income taxation for each child. Members of the Opposition claimed that New Zealand was the highest taxed country in the Empire. He would point out that in the £4OO field and also in the £6OO field, income tax in Great Britain was slightly higher. The member for Kaipara would admit that Britain was within the Empire. (Laughter). Hon. J. G. Coates: Yes. but the tax in Britain is not higher than ours. Mr Nash: ft is. Mr Coates: It is not. You have not added the wages tax to our taxation. The Speaker: Order! The Honourable Minister is replying.

Mr Nash: I have in my hand a book comparing taxation in Britain, Australia and New Zealand. I will show it to the honourable gentleman whenever he likes. Mr Coates: You have not added our wages tax, all the same. Mr Nash: Has the honourable gentleman added the workers’ insurance paid in Britain to the taxation there? Mr Coates: Yes.

Mr Nash: I have also' added the eightpence in the pound paid in wages tax here and I would draw the honourable gentleman's attention to the fact that Government taxation in New Zealand embraces all the public services, whereas that in England does not. The votes for the police and education are not included in the British Government’s taxation. Government Members: He’s got you there! Mr Nash continued that the Opposition had been misleading the country by saying that New Zealand was the most heavly taxed in the world, but it happened to be greater in South Australia than in New Zealand. The country in Europe most heavily taxed was Britain, where there was the best standard of living. In New Zealand the standard of living was as good as any in the world. The rise on the cost of living had been 7 per cent., but the increase in wages was 30 per cent. A member of the Opposition had advocated family allowances and had urged the reduction of taxation, but the Government could not do both. There was not a member of the Opposition, he said, who had voted for the increases in pensions which the Government had made and they would not vote for those pensions to be reduced. If the same course were to be followed during the next slump—if there were to be a slump as the Opposition prophesied—God help this country. If Slump Comes.

The Opposition had said the Government had not placed any new pensions on the Statute Book but this was incorrect. The Government had given new pensions to aged and deserted wives among others. If a slump came the Government would extend the production of goods that could be made in New Zealand. •

Speaking of land taxation, Mr. Nash stated that under the Bill the farmer would suffer no hardship. The Opposition had asked what the Government would do if oversea prices fell. What had the Opposition done when prices had fallen? Opposition members: You are dodging the point. Mr. Nash: Oh no I’m not. I have already explained that if oversea prices fell and affected the income of this country we would insulate the country against these outside influences.

Members of the Opposition knew that if they told the country what they would do during a fall of oversea prices they would never get back to the House to do anytning.

In conclusion, Mr. Nash said that the old-age pensioners were better off than they had been before. The wage earners were better off, the country’s flocks of sheep were greater, exports were greater and income was the greatest for 80 years, and if another two years passed and the same standard of progress was maintained as during the past 12 mont’s, all records would be broken. On the motion for the second reading being put to the House it was forced to a division and carried by 42 votes to 16. On the motion of the Prime Minister the committee stages of the Bill were deferred until to-morrow evening and the House rose at 10.36 p.m.